Complaint filed in diocese settlement case

Attorneys representing sex abuse victims colluded with a circuit judge and the Catholic Diocese to pocket $2.5 million and steer away future molestation cases, a complaint filed with the state Supreme Court claims.

The complaint, filed in December by Greenville lawyer J. David Flowers, alleges negligence and breach of fiduciary duty by class counsel; civil conspiracy by class counsel, the diocese and Circuit Judge Diane Goodstein; and "outrage against all Defendants."

"Collusion by a church, lawyers and a judge to harm the rights and interests of victims of sexual abuse constitutes extreme and outrageous conduct which exceeds all possible bounds of decency and which must be regarded as atrocious and utterly intolerable in a civilized community," the complaint states.

Larry Richter and David Haller, the two attorneys who represented the class of victims, strongly denied the allegations. Goodstein did not return phone and e-mail queries by The Post and Courier.

In an unusual request, Flowers is petitioning the South Carolina Supreme Court to exercise "original jurisdiction" and hear the case directly, without waiting for it to make its way

through a normal appeal process. Such cases are rare and occur only when the interests of the public are at stake.

The complaint follows a friend-of-the-court brief filed by Flowers in June last year, in which the lawyer first made an accusation of collusion. The Supreme Court petition and other documents in the case were reviewed by Michael J. Virzi, an expert on legal ethics who teaches at the University of South Carolina School of Law and recently served as Assistant Disciplinary Counsel to the S.C. Supreme Court. Virzi, who was hired to do the review by Flowers, is chairman of the South Carolina Bar Ethics Advisory Committee.

"It is my opinion that (Richter and Haller) engaged in negligent acts and omissions in their representation of Plaintiffs," he said in an affidavit listing 12 concerns, including "failure to provide competent representation," "failure to act with reasonable diligence and promptness," "failure to keep clients reasonably informed," "attempting to charge and charging an unreasonable fee" and "representing clients when the representation involved a concurrent conflict of interest."

Richter called the allegations "ludicrous" but said he couldn't comment on specifics because the case was pending.

"David Flowers is a very strange man and has a very strange agenda," he said.

Richter's attorney, Warren C. Powell, would not comment on the case, referring a reporter to a response filed with the Supreme Court. In the response, Powell stated that his clients "have no objection to the Supreme Court exercising its original jurisdiction over this action" but request that the court "conduct discovery, retain and identify experts, and file appropriate motions" because of the complexity of the case.

In a detailed e-mail response to questions posed by The Post and Courier, diocese spokesman Steve Gajdosik strongly rebutted the charge of collusion and restated the confrontational nature of the case in which Richter and Haller sought to have the court sanction the diocese, prompted an investigation into possible cover-up and sought to have church officials held in contempt. Gajdosik also explained that the diocese did not agree to a class counsel fee based on hourly billing and challenged the amount of the award at a 2007 hearing.

Flowers, who said he hired Virzi to provide an affidavit according to court rules, would not discuss the case on the record, citing the Supreme Court's pending decision.

In his complaint, Flowers said that the parties to the settlement allowed Richter to choose a legal venue other than Charleston County, and that he chose Goodstein's courtroom in Dorchester County.

Richter said in June that he selected Dorchester County because of its reputation for efficiency and relatively uncluttered docket of cases. He said he thought its rural location out of the limelight would appeal to the diocese.

Peter Shahid, attorney for the diocese, told The Post and Courier last year that the case belonged in Dorchester County because it was part of complex proceedings that would best be adjudicated by Goodstein.

In recent years, Goodstein has been mentioned as a candidate for the state Supreme Court, according to reports. Richter, a former state senator and circuit judge, ran unsuccessfully for attorney general in 2002.

In his e-mail, Gajdosik wrote that "Judge Goodstein was judicious in her review of this case, meeting with the parties, expressing her concerns and guiding this case in a fair resolution."

The complaint takes issue with Richter's "astonishing statement" that he has maintained a lifelong relationship with the Diocese of Charleston. "The reason this statement is astonishing is that he never disclosed this information to the members of the classes," the complaint stated, citing a conflict of interest.

Richter has publicly discussed his religious status to emphasize the gravity of the case he was pursuing against his own church.

The complaint questions the legitimacy of the $2.5 million fee awarded by Goodstein to Richter and Haller.

Billing issues questioned by the documents include:

• Repeated billing for more than 24 hours in a single day.

• Billing individually for e-mails sent en masse.

• Excessive billing on the last day of the month, including Feb. 30, "a day that does not exist."

• Consecutive one-hour entries registered within less than a minute of each other.

"Defendants' billing records show 3,385.5 total hours spent by lawyers and staff at Richter & Haller; however many of the time entries are clearly false in that they are nonsensical and/or impossible," Virzi states.

Haller explained the billing method last June, saying calculations were made with the help of a semi-automated computer program that often time-stamped the line item at the hour of the calculation, not when the task was performed. Haller also said that calculations for days in which billing hours exceeded 24 were totals representing the entire time spent on a given task, not the time spent that day.

On Monday, Haller said the charge of collusion was "delusional or irrational" and that he was very proud of his work on the case. He said the billing records, prepared according to case law precedent, were designed to provide the court with justification for class counsel's fee. A defined fee range — $900,000-$2.5 million — had been negotiated with the diocese, and the final payment amount was decided by the court, Haller said.

"To cap exposure to both the diocese and the class, we settled on a range," he said. As a percentage of the total settlement amount, the fee is reasonable, he said, adding that Flowers was present at a February 2007 hearing at which attorneys' fees were discussed. "I think it's a fair question to ask, 'Why now, two years later, is it suddenly an issue?' " Haller said.

Gajdosik wrote in his e-mail that victims' settlement awards were determined independently from attorneys' fees, and were not affected by the amount received by class counsel.

"I think the important thing to remember is that no victim received a dollar less in their claim due to attorney's fees," Gajdosik wrote. "Even after fees were paid, there were excess dollars returned to the Diocese. Would the Court have awarded lower attorney fees, the Diocese would have realized a larger return of its deposit."

Flowers, who was involved in the sexual abuse case against Porter-Gaud School settled in 2000, has asked the court to force class counsel to forfeit its fee until billing questions can be resolved.

Virzi, in his affidavit, sums up: "It is my opinion that Defendants' conduct fell below the standard of care, competence, diligence, and loyalty expected of lawyers."

The parties wait to know whether the S.C. Supreme Court will agree to hear the case under "original jurisdiction." If the high court says "no," the case could be filed in a lower court for adjudication.

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